CIO Update columnist Claudio Muruzábal of Neoris.">

The Case for Nearshore Outsourcing - Page 2

Apr 10, 2007

Claudio Muruzabal

Time Zone: Nearshoring offers the alternative of having the developer, support organization and user community working in similar time zones. This is a critical element in most engagements and could be a defining component in those cases where online interaction is a must.

Geographic Proximity: For most outsourcing deals to function properly, you need some measure of face-to-face interaction. This is as true at the project manager level as it is at the power-user level. Being close to your vendor gives your teams a chance to build chemistry, too.

Immigration Advantages: Of course, travel works both ways. A CIO who oversees a project that requires a mix of onshore, nearshore combination and rotational assignments will play host to visiting workers and need to understand the rules governing Visas and any trade agreements.

The good news is, under NAFTA (North American Free Trade Agreement), flexible Visa arrangements allow nearshore professionals to travel to the U.S. from Canada or Mexico to work for extended periods of time.

Intellectual Property Protection: NAFTA also provides for increased protection of intellectual property rights. This is a critical component when sensitive proprietary information needs to cross borders as a result of the nearshore engagement.

Cultural Affinity: There is more to affinity in a working relationship than language. When a country shares an extensive border with another and has a common history spanning more than 300 years, like the U.S. and Mexico, there are culture affinities that are strong. When it comes to building the necessary empathy to collaborate in a complex project, this affinity plays a critical role.

Cost Advantage: All of the previous advantages mentioned lead to an ultimate cost advantage for nearshore services. Proximity leads to more interaction at a lower cost allowing for project management to be more present in the project, and cultural affinity reduces the need to spend many cycles to reach a conclusion.

Time zone proximity eliminates the need to work extra hours. As a result of all this, the apparent hourly rate differential between nearshore service and traditional Far East based service is eliminated and true cost converges.

It is cost advantages that are the ultimate proof-point for any outsourcing program. Nearshore services provide similar cost advantages to those in more far-flung areas of the globe. However, only those organizations that have experienced traditional Far East-based outsourcing know the impact of some of the issues outlined above. In fact, it is actual veterans of these wars that coined the concept of nearshoring being “India without the pain.”

Claudio Muruzábal is CEO of Neoris, a global business and IT consultancy, specializing in nearshore outsourcing, value-added consulting, and emerging technologies.

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